Security Deposit or Damage Waiver?

I received an email from Vasily, one of our students today. He’d asked me for prices for chartering a catamaran. As I’m not in the office this week, I simply ‘cut and paste’ the information we’d been sent by the yacht charter company. Vasily (quite rightly) got back to me asking:

2500 – something called SD – what is this by the way?

I’d normally have explained this rather than just sending the information as it was. I’ve replied to Vasily but thought it was also worth posting more about this. If you’re new to chartering it’s something you should know. SD refers to the Security Deposit asked for by the yacht owner.

What is a Security Deposit?

Traditionally when you charter a yacht you leave a refundable security deposit with the owner before you depart. This is typically 1000€ – 2500€. The bigger and newer the yacht, the larger the security deposit will be. Normally what it does is to cover the insurance excess on the yacht.

You pay the security deposit either in cash or with a credit/debit card when you pick up the yacht. You won’t be able to leave port until it has been paid.

When you return the boat with no loss or damage you are refunded the total amount.

If you lose something (a fender or winch handle for instance) or damage something (a navigation light or passarelle maybe), then the yacht owner will deduct an amount to cover the replacement or repair before giving you back the remainder of your deposit. He’ll probably charge for labour for the replacement or repair as well. If you do lose something, it often pays to replace it yourself instead of returning the boat with something missing.

If the damage is greater than the amount of your security deposit, the owner will make a claim on the yacht’s insurance policy; you won’t be expected to pay any more.

Something you should be aware of is what happens if the yacht is damaged through no fault of your own – perhaps by another boat. Regardless of how the damage was caused, you will be held responsible until such time as the other yacht’s owner compensates your yacht owner.

What to do if you have an accident

If you are involved in ANY incident with another boat, there are three things you must do.

Write down the details of the any other boat/s involved – yacht’s name and registration number, what type of yacht it is, what flag it is flying, and any other details such as the charter company name.

Notify your charter company, telling them what happened and an account of any damage. Pass on any other yacht’s details you have collected. They will tell you how best to handle the situation.

The skippers of all boats should report the incident to the nearest port police office. If the other skipper is not willing to do this you should report it so it is on record. Ask for a copy of the report. (they may be able to give you a translation as well as the Greek original).

Often you’ll find that the skipper who caused the damage will not want to report it, especially if his own boat wasn’t damaged. He may offer to pay then and there for the repair. It’s quite common for one yacht to damage one of the navigation lights on you bow, for example. If you can get this replaced and fitted there and then and the other boat pays for it, that’s fine but make sure your charter company knows and accepts this.

Be warned that, if your yacht is damaged, the charter company is entitled to withhold your security deposit even if the damage was caused by another yacht. They will try to make a claim on the other yacht but they don’t always succeed if the other yacht denies responsibility. If the other yacht was also chartered they will contact the owner and ask for the money to be deducted from the other security deposit. This is where having a port police report is helpful.

If the other charter company pays up, then you will be refunded but, if they are unable to collect the money from the other yacht, you could end up paying.

This may seem unfair but for the duration of your charter you assume responsibility for the yacht as if it were your own. If you owned the boat and it got damaged you’d have to pay unless you made a successful claim against the other party.

Unfortunately, not all charterers are very honest when it comes to admitting fault.

What is a Damage Waiver?

In recent years some of the larger charter companies have introduced an alternative to the refundable security deposit. This is a non-refundable damage waiver. It works in a similar way to the damage waiver that you can choose to pay when you hire a car.

Instead of paying a deposit which is refunded at the end of your sailing, you pay a smaller amount, which covers any loss or damage while you have the boat, but is non-refundable.

A security deposit is usually 800€ – 3000€ and is refundable.

A damage waiver is usually 200€ – 300€ and is non-refundable.

Although it increases the cost of the charter a little, I’d strongly recommend taking the non-refundable damage waiver option if you are offered it. You’ll then have complete peace of mind knowing that you won’t be charged whatever happens, whether it is your fault or not.

Most inexperienced skippers will have enough to worry about taking charge of a yacht and crew without panicking at the thought of losing a hefty security deposit should something go amiss.

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